Watching brief: Ben Broadbent said the Bank had tools to curb house prices without raising rates.

Bank of England policymaker Ben Broadbent said today that the Bank will keep an eye on fast-rising house prices but that there was not yet a boom in mortgage dent that would necessitate a rise in the base rate.

In BBC radio interviews this morning Mr Broadbent said that it was not surprising that Britain's housing market was recovering along with the rest of the economy and he did not see troubling levels of credit growth.

Debt-to-income ratios have fallen and it is wrong to say the recovery is
debt-fuelled, he said.

'What really matters is not just house prices per se but whether there is a lot of credit growth on back of that. Currently, there isn’t a great deal,' he said.

'It’s clearly something the Bank and the Financial Policy Committee will want to keep an eye on.'

Earlier he said: 'Even over the last year mortgage debt in aggregate has failed to grow, or
barely, I think it is up 1 per cent.'

British house prices jumped about 10 percent in the 12 months to April, raising concerns about a new bubble in the property market.

The Bank of England's Financial Policy Committee (FPC) is due to meet next month and many economists expect it may take measures to control credit.

On Wednesday, the BoE's monetary policymakers signalled they were in no rush to raise interest rates.

Broadbent said the Bank had already taken its foot off the accelerator in terms of reducing encouragement for mortgage credit by focusing its Funding for Lending Scheme exclusively on business lending.

He said the FPC, on which he does not sit, could take measures to ensure that underwriting standards for mortgage lending remain of high quality and that the ratio of loans to incomes and property values do not rise too quickly.

Broadbent also reiterated the BoE's view that when the time comes to raise interest rates, they would go up gradually and probably to a lower level than before the financial crisis. He said that message was more important than speculation about when the BoE might start raising interest rates.

Sterling took a pounding yesterday as the Bank of England declared the UK had ‘edged closer’ to higher interest rates.

The central bank stuck to its growth forecasts of 3.4 per cent for 2014 and raised the outlook from 2.7 per cent to 2.9 per cent for 2015 in one of the most bullish inflation reports for years.

It came as official figures showed unemployment having fallen to a five-year low of 6.8 per cent at the end of March after a record 283,000 jobs were created in the first three months of the year.

‘As time has moved on and the recovery has been sustained, the economy has edged closer to the point at which Bank Rate will need to gradually rise,’ said Governor Mark Carney.

But, playing down the prospect of an early rate hike, he added: ‘Amidst the excitement that output is close to regaining its pre-crisis level we should not forget that the economy has only just started to head back towards normal.’

Carney said there was plenty of ‘wasteful spare capacity that can be used up’ in the economy before the Bank needed to act – dampening expectations that rates will rise before the end of the year.

The pound, which hit a 16-month high above €1.23 before the report was published, fell back towards €1.22. It also dipped to $1.6755 having touched five year highs close to $1.70 earlier this month.

Peter Dixon, at Commerzbank, said: ‘The message from the Bank was a bit more dovish than the market had anticipated but this largely reflected the fact that market rate expectations had been moving up a bit too rapidly.’